Hospitals Score Win to Halt New HHS Drug Discount Rebate Pilot (1)

A federal judge issued a preliminary injunction against a new government pilot set to significantly shift how certain health-care providers access steeply discounted medicines from drugmakers, halting the program from going into effect Jan. 1, 2026.

Judge Lance E. Walker of the US District Court for the District of Maine ruled Monday that hospital groups suing the US Department of Health and Human Services over its new 340B Rebate Model Pilot Program demonstrated they’ll suffer irreparable harm in order for the court to grant a temporary block on the plan.

The order hands a win to the American Hospital Association, the Maine Hospital Association, and other safety-net health systems that sued the government Dec. 1, alleging violations of the Administrative Procedure Act because the health department ignored comments about shifting the program to a rebate model.

The ruling comes after Walker appeared skeptical of the government’s planned implementation of the pilot, questioning federal officials on the evidence to prove they considered the costs and burden of shifting to a rebate system.

The rule “marks a departure from the Agency’s decades-long practice of requiring upfront discounts on 340B eligible drugs,” Walker wrote, “and the Agency’s roll out has involved a rather threadbare administrative record that likely fails to consider and reasonably explain the impact of a rebate model on 340B hospitals, who rely on upfront price concessions to stretch few resources as far as possible to serve rural and poor communities.”

The American Hospital Association celebrated the freeze.

“The court’s decision halts a rule that would have caused a devastating sea change in a 30-year-old program relied upon by hospitals that serve America’s most vulnerable patients and communities,” President and CEO Rick Pollack said.

The pilot, administered by the department’s US Health Resources & Services Administration, is set to significantly change how the 340B Drug Pricing Program operates after the Trump administration approved in October rebate models from pharmaceutical companies such as Bristol Myers Squibb Co., Johnson & Johnson, and Novo Nordisk A/S.

Drugmakers under the federal 340B program currently provide up-front drug discounts to covered safety-net hospitals, clinics, and health centers that treat a disproportionate number of low-income and uninsured patients. But under the pilot, covered providers will buy certain medicines at full market price and then submit data to drugmakers to receive a rebate.

Health-care providers have been scrambling to navigate the pilot—implementing a plan that they say poses overwhelming financial challenges for entities that already operate on razor-thin margins.

Drugmakers, however, have increasingly criticized the 340B program for its massive growth and questioned how providers implement savings from the steep drug discounts they get. A recent study by IQVIA found that providers will face minimal interest costs under the rebate model.

Manufacturers AbbVie Inc., AstraZeneca Plc, Boehringer Ingelheim Pharmaceuticals Inc., Novo Nordisk and drug industry group the Pharmaceutical Research and Manufacturers of America have all moved to intervene in the case, but the court rejected the drugmakers’ request because they failed to “demonstrate that the government will not adequately represent their interests in defending against the lawsuit.”

The case is American Hospital Association v. Robert F. Kennedy Jr., D. Me., No. 2:25-cv-00600, order filed 12/29/25.